PM in health showdown

Julia Gillard chairs the Council of Australian Governments meeting at Parliament House, Canberra.
Photo: Andrew Meares

by
David Crowe | Chief political correspondent

State premiers have signed up to Prime Minister
Julia Gillard
’s national healthcare reforms in a conditional deal that leaves them room to extract more concessions, after a long row late yesterday over how to oversee more than $16.4 billion in new funding.

The premiers will have until the middle of the year to push for further changes after reaching a heads-of-agreement with Ms Gillard last night that stopped short of endorsing the federal funding plan.

They rejected a proposed federal mechanism that would control funding from a national pool, in a dispute that West Australian Premier
Colin Barnett
said was about the structure of the change and not just the detail.

But Ms Gillard also gained approval to consider new ways to cut business costs at another meeting later this year.

The intention to forge a “seamless national economy" is aimed at removing red tape and completing another round of deregulation, amid business doubts about the political commitment to the broad COAG agenda embraced three years ago.

Ms Gillard hailed the health outcome as a “major agreement" that would result in more funding and hospital beds and moved beyond several failed attempts at reform in the past.

But she acknowledged that the heads-of-agreement signed with the premiers would take months to complete.

“We will be signing this agreement in the coming months; it’s my intention that COAG will meet in the middle of the year and we will obviously be finalising the agreement at that time," she said.

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State leaders resisted the plan out of concern that the new agencies being formed to allocate funds would add another layer of bureaucracy without improving services for patients.

The objections came as health experts warned that the new funding commitment would not deliver reform unless it was paired with a new approach to local hospital management.

Premiers were forced to cancel flights home as they argued over health, despite an early agreement on a national disaster plan to draw on lessons from the recent Queensland floods and cyclone Yasi.

Ms Gillard said the meeting had agreed to the plan she outlined last Friday in which Canberra would contribute 50 per cent of growth funding.

The deal dropped the proposal outlined by former prime minister Kevin Rudd last year to take 30 per cent of the states’ GST revenue and allocate it to health, enabling the Commonwealth to become the dominant funder by contributing 60 per cent of growth funding.

Ms Gillard said there would be greater accountability, but she made it clear the final details of the pooled funding arrangements were subject to continued work.

“The main thing with transparency is that we know where money comes from and where it’s going. We will obviously work on arrangements to minimise double-handling. No one around the COAG table wants to see any unnecessary double-handling."

Mr Barnett said that officials would work on the structure of the new agency that would oversee the national funding pool. “It’s more than just detail – it’s the structure of Commonwealth-state pooling funds, how that money flows to hospitals and the role of the state in running the hospitals," Mr Barnett told The Australian Financial Review last night.

The original proposal from the Commonwealth was to set up three new federal agencies but states resisted the plan out of concern about how the money would be released from the fund and the extent of Commonwealth control of the cash.

“We were happy to pay into the fund – the issue was really how do you get the money out?" Mr Barnett said.

The timing leaves the final agreement subject to approval from a new NSW premier, Barry O’Farrell, if the Coalition wins power in that state in the March election as tipped in all opinion polls.

Labor and Liberal state premiers had joined in warning against Ms Gillard’s plan on the grounds that it would add another layer of bureaucracy to the allocation of funding, diverting resources into management rather than front-line services.

Queensland Premier
Anna Bligh
questioned the efficiency of the new model, while similar concerns were aired by Tasmanian Premier
Lara Giddings
, Victorian Premier
Ted Baillieu
and Mr Barnett.

“I want to make sure that the extra layers of bureaucracy being proposed in this model don’t get in the way of delivering good outcomes and more money straight to the frontline of health," Ms Bligh told reporters. Despite their reservations, the premiers broadly accepted Ms Gillard’s offer of a shared funding arrangement in which the Commonwealth would fund 50 per cent of all “growth funding" in healthcare through to 2019-20.

The promise requires Canberra to pay $16.4 billion over five years to 2020, slightly more than promised under the original health reform outlined by Mr Rudd last year.

Opposition Leader
Tony Abbott
attacked yesterday’s meeting before it was concluded, declaring it was “backflip" that abandoned Labor’s previous commitments. “Anyone can get a deal by backing down on all her key demands and that is essentially what the Prime Minister has been doing over the last few days," he said.

Australian Medical Association president
Andrew Pesce
said the 50 per cent vow did not give him any great confidence that there would be any great change in the health system.

He urged state premiers to act on last year’s plan to devolve responsibility to local health and hospital networks, saying this was a vital way to improve efficiency.